The Securities and Exchange has a potential solution for issuers struggling with how to ensure that private securities offerings are made only to specific states in an age of globally reaching websites and social media sites: monitor and block IP addresses.

A newly published addition to the Division of Corporation Finance’s Compliance and Disclosure Interpretations deals specifically with Rule 147, a registration exemption offered to companies that want to raise limited amounts of capital from investors. To qualify, the company must be incorporated in the state where it is offering the securities, conduct at least 80 percent of its business operations in that state, and only sell the securities to investors who live in that same state.

The guidance addresses the question: “Can an issuer use its own website or social media presence to offer securities in a manner consistent with Rule 147?”

“Issuers generally use their Websites and social media presence to advertise their market presence in a broad and open manner so that information is widely disseminated to any member of the general public,” CorpFin says. “Although whether a particular communication is an “offer” of securities will depend on all of the facts and circumstances, using such established Internet presence to convey information about specific investment opportunities would likely involve offers to residents outside the particular state in which the issuer did business.”

It adds that “issuers could implement technological measures to limit communications that are offers only to those persons whose Internet Protocol, or IP, address originates from a particular state or territory and prevent any offers to be made to persons whose IP address originates in other states or territories.”

Offers should also include disclaimers and restrictive legends that make it clear the offering is limited to residents of the relevant state, it adds.

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